Gold Slips on Middle East Uncertainty

Gold fell below $4,450 an ounce on Friday and was set for a weekly decline of more than 2%, pressured by ongoing uncertainty in the Middle East that kept inflation risks and interest rate concerns in focus. President Donald Trump said peace negotiations were approaching their final stage and is reportedly reluctant to re-enter full-scale war with Iran despite recent tensions. However, Iranian Foreign Minister Abbas Araghchi said there has been no meaningful progress in the discussions. Iran-backed Hezbollah also rejected a US-mediated ceasefire proposal between Israel and Lebanon, adding to doubts over efforts to de-escalate regional hostilities. The prolonged conflict and continued disruptions to energy flows through the Strait of Hormuz kept oil prices elevated, reinforcing concerns about inflation and the risk of higher interest rates.

Gold steadied above $4,450 an ounce on Friday, holding onto gains from the previous session as hopes persisted that the US and Iran could still reach a diplomatic solution to end the conflict and reopen the Strait of Hormuz. President Donald Trump said peace negotiations were nearing their final phase and is reportedly reluctant to return to full-scale war with Iran despite recent tensions. However, Iranian Foreign Minister Abbas Araghchi said there has been no meaningful progress in the talks. Iran-backed Hezbollah also rejected a US-mediated ceasefire proposal between Israel and Lebanon, raising doubts about Trump’s efforts to bring an end to regional hostilities. Despite the recent support, gold remains on track for a weekly decline as the prolonged conflict and continued disruptions to energy flows through the Strait of Hormuz kept oil prices elevated, fueling concerns about inflation and the prospect of higher interest rates.

Gold climbed above $4,500 per ounce on Thursday as hopes for a Middle East resolution weakened the dollar and oil prices, easing concerns over inflation and interest rate hikes. Israel and Lebanon’s agreement to implement a ceasefire and end hostilities fueled optimism for a broader deal to de-escalate the US-Israeli conflict with Iran. Additionally, the Republican-led US House of Representatives passed a resolution to block President Donald Trump from continuing military action against Iran. Still, uncertainty about the war’s end lingers, and regional tensions remain high. Since the conflict began in late February, gold has lost about 16% as surging oil prices stoked inflation fears and raised the likelihood of higher interest rates. Meanwhile, consultancy Metals Focus forecasts gold will resume its bull run in the second half of the year but expects demand to fall by 2% in 2026, driven by double-digit declines in jewelry and central bank purchases.